If you already own properties in the area I’m sure it would be pretty easy to calculate expenses by looking at the other properties in your portfolio. However, most of the time, you’ll have no idea because you don’t own a property in the area. Instead, here are a few simple tips for uncovering the future potential expense on your rental property:

Ask local property managers/estate agents: Most property managers/estate agents would gladly give you this kind of information, knowing that the more helpful they are, the greater chance you may use them as a management company someday. Simply call them up and say, “Hi, I’m looking to buy a rental property in the ____ area and am just beginning my research. Do you mind if I ask you a couple quick questions about expenses?”

Make some phone calls: Secondly, feel free to simply call the company who issues the expense and ask them! For example, not sure what water will cost on your next rental house? Call the company or energy supplier in charge of the water bill and ask them! Most of the time, they will give you an average on the property for the previous few months or at least give you a rough estimate.

Do your research: It’s quite easy to find out certain information about properties on the internet such as how much your council tax will cost or if your property is energy efficient

Now that you know how to find out about the expenses, let’s talk about what expenses you need to account for.

Step One: Identify Fixed Expenses

The first things we want to look at are the fixed expenses. Fixed expenses can be a little confusing because they are not always “fixed” per se, but they are regular in occurrence.

Below is an example of the fixed expenses you are likely to experience when renting out property.

Step Two: Identify Variable Expenses

Variable expenses may or may not occur but you should prepare in case they do so.

Vacant property – your property having no tenant could impact your monthly outgoings so it is important to keep it occupied

Maintenance – Such as cracked tiles and everyday wear and tear.

Repairs – such as a faulty boiler or broken hand rail.

Covering costs for tenants – Such as council tax, water bill etc, (although this is at your discretion and most tenants cover these fees)

Step Three: Put It All Together

Finally, it’s time to put all your numbers together and see what you get. At this point, it’s as easy as adding, subtracting, and a little multiplication.

If you are doing these calculations on your own, simply add up the numbers and discover how much your property will likely cost you each month. Remember, these numbers are averages, over time, but should give a fairly close guess at what the future will hold for your property.

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